City of Sydney Decentralized Water Master Plan. Developed From Project #4487, Institutional Issues for Integrated One Water Management

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1 City of Sydney Decentralized Water Master Plan Developed From Project #4487, Institutional Issues for Integrated One Water Management

2 9.2 City of Sydney Decentralized Water Master Plan The following section summarizes the challenges for the City of Sydney Decentralized Water Master Plan Summary of Key Issues This case study focuses on the transition towards a One Water approach to urban water management at a city scale, namely that of the City of Sydney. The challenge facing the City of Sydney in the planning phase was a lack of strong leadership and clear direction from state and federal government departments, and initially from the City of Sydney as well, to drive a sustainability agenda to actively facilitate city-wide water sensitive urban design (WSUD). This, together with a lack of a systems approach to urban planning, led to opportunities for integrating services in a planned way being missed (these are shown in light orange in Figure 9-7). More recently the challenges facing the City of Sydney in implementing the Decentralized Water Master Plan relate to the actual funding of projects and initiatives, regulations to encourage water efficiency through recycling, and enhancing the capacity and knowledge of city planners within the council (Figure 9-7). Figure 9-7. Challenges for the City of Sydney Decentralized Water Master Plan Key Drivers Towards One Water In 2008, the City of Sydney launched Sustainable Sydney 2030, the CoS s integrated sustainability strategy, illustrating the Council s commitment to environmental leadership (CoS, 2008). The main drivers for the strategy have been cited as ensuring resilience to climate change (drought) and reducing the pollution levels in the waterways and harbor. Institutional Issues for Integrated 'One Water' Management 9-1

3 As part of Sustainable Sydney 2030, the Green Infrastructure Plan underpins the strategy and sets clear deliverable targets. One of its cornerstones is the Decentralized Water Master Plan (DWMP), along with three energy master plans (for tri-generation, renewable energy, and advanced waste treatment) and a master plan for advanced waste collection. The DWMP sets the path towards a reliable supply and local network of recycled water that can be accessed and used for keeping the City of Sydney green and cool under changing climatic conditions. Sydney s climate is characterized by long spells of drought creating uncertainty about water security (CoS, 2012a). More than 50% of the water infrastructure in the city is more than 70 years old and is therefore reaching its design capacity to meet future growth in population density in the city, and it is expensive to upgrade (CoS, 2012a). By reducing demand through efficiency measures, and substituting drinking water with recycled water, the operational life in these existing networks may be further extended. Increasing the tree canopy cover in the city to both increase the livability of the city and reduce the heat island effect was a further indirect driver for stormwater harvesting and recycled water schemes. In 2007, the Australian federal government set a recycled water target of 30% (of wastewater collected) for the capital cities. While the 2010 status report showed that there had been a significant investment in recycled water schemes across Australia, Sydney recycled only 7% of its wastewater compared to the other the major cities that achieved 20% or greater (GHG, 2012). Organization s Goals and Objectives (Drivers) Organization s Functions Figure 9-8. Location of the City of Sydney on the Sustainable Integrated Water Management Continuum. 9-2

4 The drivers for the CoS s DWMP can be located on the Sustainable Integrated Water Management continuum (shown above), viz. reliable secure water supply, and environmental protection. While the stated overall objective is to provide for a sustainable community which is resilient to climate change and other future risks, the CoS will need to work towards integrating the other three drivers and their associated stakeholders in order to move the CoS to a One Water community. In addressing these drivers, the key objectives of the DWMP are to (CoS, 2012a): Reduce water consumption across the City of Sydney local government area through water efficiency programs, and use of local recycled or alternative non-potable water sourced from stormwater, black water, wastewater, rainwater, greywater, and sea water via thermal desalination and tri-generation. Reduce water consumption in Council s own buildings through water efficiency programs and the connection of Council facilities to local or precinct-scale recycled or alternative nonpotable water supplies. Reduce sediments, suspended solids, and nutrients discharged to local waterways from stormwater run-off generated across the City of Sydney local government area. Figure 9-9. Map of Consumption by Area in the City of Sydney. Decentralized Water Master Plan. Institutional Issues for Integrated 'One Water' Management 9-3

5 9.2.3 Background to Water Management in the Sydney Region Water services for the City of Sydney are managed by a number of different organizations, which makes planning and co-ordination difficult. Sydney Water Corporation (SWC), through a centralized network, provides 34 billion liters of potable water a year to the City of Sydney from dams located more than 70km from the city. This demand is likely to grow by 30% by Since 2011, mains water is also sourced from a desalination plant located 40km away. Sydney has the oldest and most intricate network infrastructure in Australia, much of which is reaching its design life and operating capacity (CoS, 2012a). Local governments located in the metropolitan boundary of Sydney do not have the responsibility for water supply planning; this is undertaken by the Metropolitan Water Directorate. Wastewater (sewage) is also managed by SWC. The wastewater undergoes primary treatment (the removal of suspended solids) before it is discharged through deep ocean outfalls. Stormwater is managed by the CoS, and is collected through a network of drainage pipes which are owned by both SWC and the CoS in roughly equal proportions. In addition, the various services and types of water are regulated by a range of institutions as captured in Table 9-4. The institutional landscape is constantly changing as new departments and government agencies replace old ones, making it even more difficult to navigate this space when planning decentralized schemes. 9-4

6 National level State level City level Local/precinct level Table 9-4. Institutional Landscape. Scale Entities Roles and Responsibilities Department of Environment (formerly Department of Sustainability, Environment, Water, Population and Communities) NSW Office of Water (NOW), located in the Department of Primary Industries (DPI) Independent Pricing and Regulatory Tribunal (IPART) Metropolitan Water Directorate (MWD) located in the Department of Finance and Services New South Wales Health Office of Environment and Heritage (OEH), located in the NSW Department of Premier and Cabinet Environment Protection Authority (EPA) Department of Planning and Infrastructure (DoPI) Sydney Metropolitan Management Catchment Authority (CMA) Sydney Water Corporation City of Sydney Private developers/owners Private operators Designs and implements the Australian Government s policies and programs to protect and conserve the environment, water and heritage. Water management, including water policy, water sharing plans, water availability and allocations, monitoring, modelling, environmental flows, ecology and water quality; water licensing. Determines prices for water and wastewater services for utilities and utility-like service providers. Leads a whole-of-government approach to water planning for greater Sydney; provides policy advice on water industry competition and reform; delivers recycling funding and support. Protect public health through appropriate water quality standards, drawing on the National Guidelines for Water Quality. Protection of water resources and river health. Responsible for environmental regulation and associated activities throughout NSW. Implements the efficiency program (BASIX) to reduce domestic water consumption. The supply of raw water, the protection and management of the catchments and infrastructure, and regulating activities such as development in the catchment. Specifically improve the water quality of Sydney Harbor and its catchments. Supplies treated water, wastewater, recycled water and some stormwater services to over 4.6 million people in Sydney, and manages the associated distribution networks. SWC is regulated under the Sydney Water Act. Stormwater planning and management, and associated pollution control. Urban planning and infrastructure design. The construction of water efficient buildings and precincts, investing in water recycling infrastructure. Operating decentralized small scale water recycling systems, and delivering a reliable service to their customers. Regulators and policy departments have grappled with the complex questions of how to regulate owners and operators of decentralized water schemes. A major challenge has been how to regulate the protection of public health and safety, while balancing multiple objectives such as enhancing competition, meeting water security objectives and protecting the environment. In the state of New South Wales, the Independent Pricing and Regulatory Tribunal (IPART) introduced the Water Industry Competition Act (WICA) in 2006 to address some of these issues (IPART, Institutional Issues for Integrated 'One Water' Management 9-5

7 2008). Australia s first third-party access and licensing system enables the private sector to enter the industry, providing drinking water, recycled water and wastewater services while ensuring water quality and protecting public health and the environment. The Act is currently under review to address limitations that have been identified during its implementation (these are discussed in the next section). The introduction of the Australian Guidelines for Water Recycling (AGWR) in 2006 shifted the focus for recycled water from a prescriptive end product management approach to one that focuses on systems-based risk management (EPHC et al., 2006). The guidelines require proponents to undertake scheme-specific risk analysis, rather than comply with prescriptive standards (as was required in the past). The challenge therefore is to steer a sensible course between the extremes of failing to act when action is required and taking action when none is necessary (NHMRC, 2011). A lack of action can compromise public health (NHMRC and NRMMC, 2011), whereas excessive caution can have significant social, environmental and economic consequences. The Building Sustainability Index (BASIX) was introduced in 2004 with the aim of delivering equitable, effective water and greenhouse gas reductions across the state of NSW and is regulated under the Environmental Planning and Assessment Act. BASIX applies to single and multi-residential dwellings and aims to reduce water and greenhouse gas emissions by up to 40% against the state benchmark, taking into account regional variations such as soil type, climate, rainfall and evaporation rates. The benchmark is equal to 90,340 liters of potable water per person per year (DoPI, 2013a). The Department of Planning is in the process of reviewing the regulations that drive water and energy efficiency with a view to achieving further efficiencies (DoPI, 2013b). However in other states in Australia, these conditions have been relaxed to make housing more affordable (Mander, 2012). National Australian Built Environment Rating System (NABERS) is a voluntary rating system that measures the energy efficiency, water usage, waste management and indoor environment quality of a building or tenancy and its impact on the environment. For over ten years, the NABERS six star rating system has helped property owners, managers, and tenants across Australia to improve their sustainability performance, reap financial benefits, and build their reputation. This rating scheme is a key driver for the private sector to contribute to the success of the Decentralized Water Master Plan. The Sydney Harbor Catchment Water Quality Improvement Plan (WQIP), which is being led by the Sydney Metropolitan Catchment Management Authority (SMCMA), requires partnership support from the local councils (of which the CoS is one) and government agencies which manage land draining into Sydney Harbor. While stormwater quality is not directly regulated, the approach of the City of Sydney is to strive for continuous improvement and control of stormwater runoff into the harbor in order to improve the livability of the city and its natural environment. 9-6

8 9.2.4 Analysis of Challenges and Responses The initial challenge facing the CoS was a lack of direct political leadership and direction from state and federal governments to actively facilitate city-wide water sensitive urban design (WSUD). Whilst broad targets were set at the national and state scales, specific targets/goals for local governments have never previously been suggested Planning Phase At a national level, the Australian Government in 2007 committed itself to a national target of recycling 30% of wastewater by 2015, and provided financial support to achieve that target (Marsden Jacob, 2012). On current estimates, national wastewater recycling by 2015 is expected to range from 18.7% to 20.3%. At the state level, the NSW Government prepared a plan during the previous drought to ensure water security, which included a wastewater reuse target to create potable water savings of 70 GL by 2015 (SWC, 2010). This target was viewed by the City of Sydney as not challenging enough for local councils, considering that approximately half of the target is already supplied by Sydney Water, and it was not translated to specific council level. Further, the recent significant replenishment of major urban dam supplies and the construction of the Sydney desalination plant removed the drive to supplement water storages with recycled water, and resulted in deferment of any recycling strategies and initiatives. The visions for water planning at all spheres of government have generally been short term, dictated by the short political election cycles and the prevailing environmental conditions of the day. During the drought in the mid 2000s, the focus of the 2006 Metropolitan Water Plan was on large-scale water recycling projects, which took advantage of the major opportunities for financially viable large schemes in the short term. Large scale recycling opportunities are now most viable when supplying large new growth areas in outskirts of Sydney. The more recent focus of the 2010 Metropolitan Water Plan is on smaller local-scale projects. These include stormwater projects carried out by councils to irrigate parks and sports fields to the benefit of the community (MWD, 2010). The 2014 Plan is currently being developed, but given the availability of desalinated water via an overcapacity desalination plant, the drivers for recycled water are not as strong in the short term from a State planning perspective. In response, the DWMP has been championed at a senior level within the City of Sydney Council, most notably by the Lord Mayor and the CEO for the CoS. The Lord Mayor has twice been re-elected on a platform of environmental leadership, thereby confirming her mandate to pursue the strategy. In addition, the Council undertook an engagement process to test the vision for the Green Infrastructure Plan with the residents. The key drivers for this Plan were discussed in section 2 of this case study. Due to the large number of players and the disaggregated nature of the sector (as illustrated in Table 9-1), a lack of a systems approach to urban planning has led to opportunities for integrating services in a planned way being missed, or implemented in an uncoordinated manner. With the recent densification of the city, infill projects are ideal for implementing new ideas; however, the absence of an integrated and holistic water management plan has meant that some of these potentially viable opportunities have not been taken advantage of. To overcome this, the Council employed consultants to engage with the relevant state departments, utilities and community stakeholders to develop the Decentralized Water Master Plan (DWMP) a key component of the Green Infrastructure Plan. Institutional Issues for Integrated 'One Water' Management 9-7

9 Initially it was difficult to establish a representative Reference Group for the DWMP, since decentralized water schemes were not high on the agenda of most state departments and agencies. A 12-month consultation process was required to bring all the relevant stakeholders together and form a common partnership around the strategy. The stakeholders included Sydney Water, the Independent Pricing and Regulatory Tribunal, Metropolitan Water Directorate, NSW Office of Water, NSW Office of Environment and Heritage, NSW Department of Planning and Infrastructure, and neighboring councils. The plan was finally approved by Council in February 2013 (CoS, 2013) Implementation Phase Figure Decentralized Water Master Plan Cover Page. City of Sydney Master Plan. More recently the challenges facing the CoS in implementing the Plan relate to three key aspects: The actual funding and financing models of projects and initiatives. Regulations to encourage water recycling. Changing the capacity and knowledge of city council planners and the urban development sector Economic Investment Models The financial viability of recycling schemes has proven to be a major barrier for getting the private sector involved. Demonstrating the viability of wastewater and stormwater recycling schemes by reflecting the avoided costs and the non-monetary costs and benefits (such as those associated with social and environmental criteria) in a transparent and consistent manner has proven to be a key challenge. Currently private investors are not able to account for the avoided 9-8

10 costs to the potable water and sewerage networks due to deferred capital works. The private schemes that have been established to date have mostly been driven by developers wanting to establish precincts with a high environmental rating in order to attract high paying commercial clients, such as Darling Quarter and Central Park. In addition, the water market is currently not designed for competition. Postage stamp, pricing where a water utility is able to spread the cost of new water infrastructure across its whole customer base, is not an option for private recycling schemes. A supplier of recycled water can only recover capital infrastructure costs directly from the customers of the recycled water thereby making potable water much cheaper than recycled water. The CoS sees its role as creating a conducive environment for developers to consider recycling through setting up a planning framework and infrastructural incentives. The CoS has been able to leverage investment for recycling projects through the Green Infrastructure Fund, which is drawn from Council cash reserves to fund initiatives such as Green Square and Sydney Park. Financial projections by the CoS estimate a budget allocation of $40 Million to achieve 10% recycled consumption within the local government area by 2030 (CoS, 2012b). These expenses have been viewed as whole-of-society costs which are shared across the citywide stakeholders and beneficiaries. The CoS has plans to install a recycled water trunk main under the proposed city tram line as an incentive for prospective recycled water producers and users to locate around this infrastructure. The challenge is to bring existing customers into a cluster to take recycled water. CoS intends to carry out further analysis to assess the viability of retrofitting existing buildings to enable use of recycled water with the assumption that a retrofit would take place during future refurbishment works and thus make buildings recycle water ready. Annual capital and operational budgets are allocated to the Council for delivering water efficiency upgrade works in all Council buildings. A further $47 million over the next 18 years is estimated for Water Efficiency programs with the local government area. The Council will continue look for federal and state contributions to assist with this financial burden (CoS, 2012b), as they have done in the past. Stormwater funding is levied as part of annual council rates and used to install and maintain gross pollutant traps (GPT) Regulations and Incentives to Drive Recycling As discussed earlier, the regulatory environment (specifically the WIC Act) is currently under review. A number of the revisions will have a direct bearing on recycling schemes located within metropolitan councils (CoS, 2014). Under the current regulation recycling schemes are not regulated under the WIC Act if the CoS is the asset owner. A recommendation in the review is that metropolitan councils be included in the WIC Act for the delivering of high risk, utility like water and wastewater infrastructure. It is important that metropolitan councils, which often do not have extensive experience in delivering or self-regulating high risk, utility like water and wastewater infrastructure, are subject to a regulatory framework which protects public health and consumers. This recommendation ensures that high risk projects delivered under the DWMP will be subject to a regulatory framework that protects public health and consumer rights. It clarifies the regulatory process for all parties and reduces the contract transaction costs if licensees with WIC Act are engaged to operate schemes on the CoS s behalf. Institutional Issues for Integrated 'One Water' Management 9-9

11 A second recommendation that has direct bearing on a future One Water approach is that entity licensing processes be separated from scheme approval processes. This will have the effect of reducing red tape and licensing costs for applicants, and will create a more level playing field with public utilities by establishing capability on an entity-wide basis. The revisions proposed for the WIC Act do not address the issue where precinct scale schemes are not treated in the same way as utility provided potable water schemes i.e., where the cost of decentralized recycled water networks can only be recovered from local authorities and/or the small number of customers connected to the scheme. Utility operated schemes benefit from regulatory support in recovering their costs from all water consumers through postage stamp pricing, and not only from those receiving the water in the precinct. Similar cost recovery mechanisms should be applied to precinct scale recycled water in recognition of their contribution to the long term water security for the population of metropolitan Sydney. It is difficult and costly to retrofit existing precincts, so the focus of the CoS has been on new developments to include recycling and water efficient systems. However, in addition to the regulatory challenges discussed above, the CoS has little leverage over large schemes within its jurisdiction. For most smaller infill developments that are approved by the CoS, developers can be encouraged to include greater water efficiency initiatives and/or recycling through the approval of their development applications. However, this is a balancing act, since if the CoS pushes too hard, they may discourage developers from the city. However, for larger developments, the CoS does not have the same powers, and is in difficult position with regard to ensuring that new developments follow the intended aims of the Decentralized Water Master Plan. Under New South Wales State law, the Planning Minister is responsible for approving all major development projects. In these cases, the City of Sydney's role is limited to providing advice to the Department of Planning and Infrastructure, addressing essential infrastructure matters where relevant and to making submissions in relation to planning applications. The collaborative planning approach through the Better Building Partnership (BBP) has this far proven to be useful strategy to help facilitate the achievement of Sustainable Sydney 2030 goals. The BBP represents a number of Sydney s leading commercial and public sector landlords who have worked collaboratively to improve the sustainability of Sydney s commercial and public sector buildings. The Better Buildings Partnership provided technical and commercial input into the DWMP Organizational Culture and Capacity for Green Infrastructure As with most new ideas or niche activities, an internal champion is needed to drive the new agenda. While the Lord Mayor and CEO drove the vision at a policy level, the Chief Operating Officer was, and remains, a critical person for getting the internal buy-in and traction from staff and the support needed to get the Plan approved by the city council. However, competing demands of internal planning staffing capacity, together with varying knowledge of integrated water systems, has made it difficult to get appropriate attention for implementing the strategy. The resources and expertise to analyze the physical and commercial environment to scope up viable projects that would interest commercial operators has proven to be a challenge. In response, the CoS has established a dedicated Green Infrastructure Delivery Team (comprising four staff), who s role includes developing recycling projects in response to the strategy. In addition a Water Strategy Manager has been employed to develop viable business and investment models that would attract potential developers and investors. 9-10

12 9.2.5 Outcomes The City of Sydney was successful in setting and adopting city-wide targets for water efficiency, water recycling and stormwater pollution control: Reduce mains water consumption across the City of Sydney local government area by 10% by 2030 through water efficiency programs (on 2006 levels). Replace 30% of 2030 potable water supplies through local recycled or alternative nonpotable water. Reduce mains water consumption in Council s own buildings and operations by 10% (on 2006 levels) by Reduce sediments and suspended solids in local waterways by 50% and nutrients by 15% by The CoS has begun to implement its strategy through employing dedicated staff. It has so far had experience in two major precincts Green Square and Sydney Park which were initially driven by the Sustainability Sydney 2030 vision. Green Square A major part of the CoS s role in Green Square has been to ensure planning controls allow for appropriate growth and development. The first major infrastructure project in Green Square is a new stormwater drainage system to be built in partnership with Sydney Water. The system will mitigate the risk of flooding through the town center. The CoS has signed an agreement with a private operator to supply recycled water to future residents in the Green Square town center. The system will utilize the captured stormwater, purify it on site, and then send the water to households for clothes washing and toilet flushing, and to parks for irrigation. Sydney Park Sydney Park hosts the CoS s largest stormwater harvesting system, and contributes towards the 2030 target for 10% of water demand to be met through local water capture and reuse. The water will be reused to top up the wetlands and irrigate the park. This project is the first of a suite of initiatives being formulated under the Decentralized Water Master Plan and is being partially funded through the CoS and the Australian Government s Water for the Future initiative. Institutional Issues for Integrated 'One Water' Management 9-11

13 9.2.6 Transferable Lessons and Enabling Actions Six key transferable lessons have been identified through this case study: Champions at two levels were key in progressing the One Water approach. Firstly at a political level to drive the adoption of the Sustainable Sydney vision. Secondly at the institutional level to drive the implementation of the strategy and address the institutional capacity requirements. Consultation with the community and stakeholders (both public and private) for confirming the vision and to support the implementation of the strategy. Capacity building within the CoS through employing appropriately skilled staff and setting up a dedicated team to implement the strategy and manage related projects. Collaboration and partnership building with the private sector to gain support for the vision and strategy, and to ensure that development projects are aligned with the strategy and are implemented in a coordinated fashion; and with the public sector to leverage capital finance and to remove administrative and regulatory barriers. Capital budgets to be allocated to key bulk infrastructure schemes that will create an enabling infrastructural environment for both future suppliers of recycled water and consumers of nonpotable water. Compliance with the strategy which can be enforced through the approval of development applications lodged with the CoS. 9-12

14 References: CoS. (2008). Sustainable Sydney City of Sydney, NSW, Australia. CoS. (2012a). Decentralized Water Master Plan City of Sydney, NSW, Australia. CoS. (2012b). Environment and Heritage Committee - 23 July Item 3 - Draft Decentralized Water Master Plan Public Exhibition. City of Sydney, NSW, Australia. CoS. (2013). Council Minutes: Item 7 - Report of the Environment Committee - 18 February 2013 (pp. 1-9). City of Sydney, NSW, Australia. CoS. (2014). City of Sydney submission to the Urban Water Regulation Review Position Paper. City of Sydney, NSW, Australia. DoPI. (2013a). BASIX - Building Sustainability Index. DoPI. (2013b). BASIX Target Review: Supporting research paper. Department of Planning and Infrastructure, NSW Government. EPHC, NRMMC, and AHMC. (2006). National Guidelines for Water Recycling: Managing Health and Environmental Risks. A publication of the Environment Protection and Heritage Council, the Natural Resource Management Ministerial Council and the Australian Health Ministers Conference. GHD. (2012). City of Sydney - Recycled Water Plan. City of Sydney. IPART. (2008). Overview of licensing regime under the Water Industry Competition Act 2006, WICA Fact Sheet. Independent Pricing and Regulatory Tribunal, NSW, August Mander, T. (2012). Reforms to cut thousands from new home costs. Queensland Government - Housing and Public Works. Marsden Jacob. (2012). Progress against the national target of 30% of Australia s wastewater being recycled by Report prepared for the Department of Sustainability, Environment, Water, Population and Communities. MWD. (2010). Water recycling is reusing water already in the system, Chapter 4 of 2010 Metropolitan Water Plan. Metropolitan Water Directorate, New South Wales. NHMRC. (2011). Australian drinking water guidelines. National Health and Medical Research Council, Australian Government, Canberra. NHMRC, and NRMMC. (2011). Australian Drinking Water Guidelines 6, National Water Quality Management Strategy. National Health and Medical Research Council, National Resource Management Ministerial Council, Commonwealth of Australia, Canberra. SWC. (2010). Water Conservation Strategy Sydney Water Corporation, Paramatta. Contact: Chris Derksema, Sustainability Director, City of Sydney, Prepared by: Dr. Pierre Mukheibir (Institute for Sustainable Futures) Institutional Issues for Integrated 'One Water' Management 9-13

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